The European Commission has rejected an offer from
Microsoft to settle its long-running antitrust case.
In what was described by one source as "a half-hearted" effort
to meet the commission's concerns, Microsoft offered to attach
rivals' software in the form of CD-Roms to new PCs running
Windows.
The commission believes that by incorporating Media Player -
Microsoft's audio and video-playing software - into the Windows
operating system, the company is putting rival players such as
RealNetworks' RealOne Player at a competitive disadvantage.
Microsoft was given the choice of unbundling Media Player and
sell it as a standalone product, or embedding a rival player inside
Windows to sit alongside Media Player on PC desktops.
The commission decided that including rival software on CD-Roms
inside the box of a new PC driven by Windows would not redress the
competitive balance.
Microsoft's rivals argued that record and film companies and
other firms offering content that can be played on media players
will, increasingly, tailor their products exclusively for
Microsoft's Media Player, because it will be the only software
player they are sure that people will have on their PCs.
"The CD-Roms won't be installed by a large proportion of PC
users," the source said.
Microsoft declined to comment on the substance of the offer and
its rejection.
Microsoft has argued that unbundling Media Player from Windows
would prevent the operating system from working properly. It also
feared the precedent that would be set if it did agree to separate
Media Player from Windows.
Future product development, such as a search engine which
Microsoft plans to launch to compete with Google, count on the
bundling business model Microsoft has employed with all its most
successful software products including Internet Explorer, Word and
Outlook Express.
One antitrust lawyer with experience in representing firms
accused of antitrust abuses said Microsoft is likely to come back
with another offer. "Although the end of the case is very near now,
I think it's too early to fire off your final offer," he added.
Paul Meller writes for IDG News Service